TERM LIFE INSURANCE WITH LIVING BENEFITS
WHAT ARE LIVING BENEFITS?
In addition to death benefit protection (up to $2 million), term life insurance can also provide living benefits. These living benefits provide the option to receive an accelerated death benefit in the event of a qualifying chronic, critical, or terminal illness while the insured is alive. This policy is a layer of protection to help you avoid exhausting all your financial resources. It's money when you need it the most and financial security for your home and family.
Term life insurance covers you for a set amount of time (or term). It provides funds to your beneficiaries if you pass away during that time. With a living benefit option/rider, your policy may also include:
Accelerated death benefits—This living benefit pays out a portion of your term life policy if diagnosed with a terminal illness. This gives you the needed cash to cover medical expenses, debt, and more.
Critical illness rider—A variation on this option, the critical illness rider allows you to access your death benefit if you’re afflicted by a specific ailment or disease.
Return of premium—With this living benefit, all the premiums you paid during the term are returned to you as long as you don’t pass away during the term. You typically pay more for this kind of policy than you would for a traditional term life policy.
Disability waiver of premium—This living benefit allows you to skip your premium payments in the event you suffer from a long-term disability for six months or more. While not a true cash benefit, the disability waiver is valuable because, statistically, we each face a 30% chance of incurring a disability that would keep us out of work for 90+ days during the span of our careers.
HOW DO LIVING BENEFITS WORK?
If you are diagnosed with certain chronic, critical, or terminal illnesses during the time you're covered by a term life insurance policy with living benefits, your policy will allow you to accelerate a portion of your policy’s death benefit amount.
Chronic illness—Allows the insured to receive up to a maximum of 24% of the policy’s death benefit (per year) should the insured be determined by a licensed physician to be unable to perform two of the six daily living functions (bathing, continence, dressing, eating, toileting, and transferring) for a period of 90 consecutive days. The maximum amount that can be received over the lifetime of the insured is 90% of the death benefit amount not to exceed $1,500,000 of the original death benefit.
Critical illness—Allows the insured to receive up to 90% of the death benefit in advance should the insured be determined by a licensed physician to have suffered a critical health condition such as cancer, heart attack, stroke, a major organ transplant, end-stage renal failure, Amyotrophic Lateral Sclerosis (ALS), blindness, or paralysis due to loss of two or more limbs. The maximum amount that can be received is the lesser of 90% of the death benefit amount of the face amount of the policy or $500,000.
Terminal illness—Allows the insured to receive a portion of the policy’s death benefit as a lump sum payment in advance of death when a licensed physician has diagnosed the insured to have less than 12 months to live. The maximum amount that can be received is 100% of the death benefit to a maximum of $1,500,000.